Market Structures for U.S. Water Quality Trading

Posted: 23 Feb 2003

See all articles by Richard T. Woodward

Richard T. Woodward

Texas A&M University - Department of Agricultural Economics

Ronald A. Kaiser

Texas A&M University

Abstract

The use of transferable discharge permits as a water pollution control policy is rapidly increasing in the United States. Drawing on evidence from existing water quality trading programs, this paper provides a taxonomy of the forms that such markets take. Four main structures are identified: exchanges, bilateral negotiations, clearinghouses, and sole-source offsets. Each of these structures has its own strengths and weaknesses; none is optimal for all scenarios. Since market structure is largely determined by a program's rules, policy makers should be aware of the differences between these structures and the conditions under which each comes to be.

Suggested Citation

Woodward, Richard T. and Kaiser, Ronald A., Market Structures for U.S. Water Quality Trading. Review of Agricultural Economics, Vol. 24, pp. 366-383, 2002. Available at SSRN: https://ssrn.com/abstract=371453

Richard T. Woodward (Contact Author)

Texas A&M University - Department of Agricultural Economics ( email )

College Station, TX 77843-4218
United States
(409) 845-5864 (Phone)

Ronald A. Kaiser

Texas A&M University

College Station, TX 77843-4353
United States

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